- Litecoin (LTC) closed above its falling wedge pattern yesterday, signaling a spike in buying pressure.
- On-chain data reveals that some market participants who sold their holdings during the breakout realized losses.
- The negative Price-Daily Active Address (DAA) Divergence suggests that the recent uptick in LTC’s value might be short-lived.
Litecoin (LTC) marked a bullish milestone yesterday by closing above its falling wedge pattern, a formation in which the altcoin had been trading since March 31.
This breakout signaled a surge in buying pressure, but surprisingly, traders who took advantage of the rally by selling their holdings experienced major losses.
Litecoin Holders Incur Losses Despite Breakout
A falling wedge pattern is characterized by an asset’s price trending between two downward-sloping trend lines, with the upper trend line acting as a resistance level and the lower trend line serving as support.
Litecoin’s price had been confined within this pattern since March 31, resulting in a 27% decline up until the breakout.
A breakout above the falling wedge is generally considered a bullish signal, indicating that buyers are overpowering sellers and that the price may be poised for an upward trend.
However, on-chain data reveals that some market participants who capitalized on the breakout by selling their holdings incurred substantial losses yesterday.
This insight is derived from the coin’s Network Realized Profit/Loss (NPL) metric, which dipped to -5.25 million yesterday.
The NPL metric tracks whether the holders of an asset across its entire network are selling at a profit or loss. When the metric’s value drops significantly, as observed in Litecoin’s case, it indicates that, on average, holders are realizing losses on their investments.
This suggests a bearish market sentiment, with traders potentially panic selling and experiencing capitulation.
